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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

Whilst the cash S&P remains below the early December high of 2079.47, the futures has now broken above the equivalent level of 2071.75 to negate any immediate continuation of larger counter-trend declines. It has been staggering to watch how the December sell-off to the 1972.56 low with a five wave subdivision/structure can mutate the subsequent advance to higher highs but this is a repeating theme that has occurred twice before during the last 12-month period and especially around FOMC meetings. ###That said, the break above December’s high now increases the probability of extending a larger five wave upswing from the October low of 1820.66 to much higher levels as we move across New Year. In this latest report, upside targets for the S&P are now synchronised with medium-term upside projections that form part of our new forecast for 2015 and beyond, scheduled for release in early January. These equivalent upside targets suggest European indices are transforming higher from the mid-October low from original zig zag patterns into double zig zag formations. This sets certain upside limits into the next advance during January/February. In Asia, the Shanghai Composite is expected higher during the next month as part of an ongoing five wave impulse pattern that began earlier this year. The Hang Seng has begun a counter-trend rally but within the background of larger declines that began in September. In Australia, the ASX has formed an important low at 5143 with upside projections that reattempt the August high of 5679. The Nikkei recently completed a three wave zig zag decline into the mid-December low – this suggests higher highs during the next month. To summarise, we expect most indices to extend advances during the next month into New Year but with upside limitations prior to a significant counter-trend decline that continues into the first half of 2015. 22nd December 2014

Financial Updates Currencies

Currencies (FX)

Recent price action for the US$ index has pushed it above the December high of 8955. Normally, this would be interpreted as a bullish sign, but Elliott Wave structure suggests that it is currently trading in an area with a high probability for a reversal – a fib-price-ratio convergence of two different time-frames is found that could trigger a reversal signature and thus confirm the conclusion of the multi-month upswing from the 2014 low of 7890. The situation is similar for the Euro/US$: its break below the December low of 1.2247 ###allows for a stretch lower, but significant support at 1.2184/83 should stall downside momentum and set the stage for a reversal signature. Moreover, the substructure of the price action during the last several weeks supports this idea as it identifies a 4th wave counter-trend expanding flat prior to current 5th wave declines – a pattern completion is close. Sterling is still trading in a rather tight trading range between the late November high of 1.5827 and the early December low of 1.5541. This week’s sell-off to 1.5543 has led us to change the structure of the 4th wave triangle from a contracting type into a descending one. Idealised short-term upside for the completion of the pattern is measured to 1.5769+/-. Await a reversal signature from there to be followed by a finalising decline towards original and ultimate downside at 1.5386. The strong upside momentum evident in the US$/Yen and its strong positive correlation with the Nikkei 225 advocate a continuation higher during the next several weeks. This suggests that intermediate wave (3) only completed at the Jan.’14 high of 10548 and subsequent wave (4) at the July low of 10106. The upswing from there labelled as wave (5) is unfolding into an expanding five wave impulse pattern and subdividing into minor degree, i-ii-iii-iv-v. A fib. 161.8% extension of wave i. measures to ultimate upside at 12618 which tallies with the upside for the Nikkei index towards 19600.00+/-. 22nd December 2014

Financial Updates Bonds

Bonds (Interest Rates)

Mixed signals were received from the latest FOMC meeting last week, initially interpreted as a hawkish statement that perceived an earlier schedule for interest rate rises in 2015. This sent yields higher for our benchmark US10yr yield from last week’s low of 2.010 to a weekly high at 2.233. This action has isolated a counter-trend zig zag visible in the preceding decline from November’s high of 2.398 implying an uptrend in progress.### Whilst levels hold above 2.010, there remains an increasing probability of an ultimate break above the September high of 2.655 – such action would confirm an uptrend in progress for next year. But should yields remain below 2.398 and instead stage a more immediate break below 2.010, then an imminent acceleration would be forecast extending a five wave impulse decline in progress from the end-Dec.’13 high with ultimate downside targets to new record lows, towards 1.306%. Naturally, we await further action to determine the main trends for the coming year. Meanwhile in Europe, the DE10yr yield had been unable to muster any upswing back inside the October trading range with yields instead edging lower towards our ultimate downside targets at 0.536%. This level defines the completion of its entire long-term downtrend and so we remain alert to the possibility of some significant trend reversal into New Year. 22nd December 2014

Commodities

The outlook for the next couple of months remains bearish basis gold’s recent counter-trend upswing from the November low of 1131.85 completing recently at 1238.76. Ultimate downside targets remain unchanged towards the 1100.00+/- area whereupon an attempt to this level would confirm the completion of the entire counter-trend decline that began from the current all-time high of 1921.50. Shorter-term, gold-mining stocks have reattempted the November lows, some breaking below whilst unfolding into zig zag patterns, but have responded by advancing back### inside the preceding trading range. This suggests a more complex trading range pattern developing prior to lower lows in January/February. Meanwhile, silver has most likely ended its entire multi-year counter-trend decline into the early Dec.’14 low of 14.51. The subsequent advance to 16.81 and 17.33 are part of a new multi-year uptrend but shorter-term retracement declines are expected. Crude oil has reached idealised downside targets that define the completion of a counter-trend decline that began from the May ’11 high of 114.83. The recent low at 53.60 has approached a fib. 61.8% retracement of the preceding advance from 33.20 and is matched by equivalent levels for Brent oil. Momentum indicators remain oversold and bullish divergences are also visible across various indicators implying the majority if not all of the selling has now dissipated. We await a reversal signature to confirm a new medium-term uptrend has begun.. 22nd December 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES